Guided busway legal battle with BAM Nuttall settled by Cambridgeshire County Council

The guided busway legal dispute with contractor BAM Nuttall has been settled out of court by Cambridgeshire County Council - leaving the authority with a £33 million bill.

The council said the agreement meant it would pay the company £84.7 million rather than the £83.9 million fee that was originally agreed.

But legal costs and other charges incurred during the dispute have pushed the total cost of the busway up to £152 million - £36 million higher than the original budget of £116 million.

Some £3 million of this black hole will be covered by a windfall from the cb1 development at Cambridge station - but the rest will have to be covered by the council, with £26 million coming straight from the council’s coffers and £5.8 million having already been withdrawn from transport budgets.

The dispute focused on the overspends, delays and alleged faults which plagued construction of the busway.

Cllr Martin Curtis, the council leader, said the settlement would protect taxpayers’ money from the risks of a lengthy court case, which was scheduled for next year.

In a worst case scenario - if the council had lost all of its case - taxpayers could have been left footing a bill for more than £100 million.

Cllr Curtis said: “The busway is a huge success and way ahead of passenger and business case forecasts. What is deeply disappointing and frustrating is that it has taken this long and cost us so much money to win our arguments and stop BAM Nuttall from trying to take tens of millions of pounds away from local taxpayers.

“BAM’s unwillingness, until now, to recognise their financial liability means they have tied up and cost Cambridgeshire taxpayers money which could have been better spent on our communities. We have always been very sure of our case and would have been willing to go to court to fight that case.

“However, following discussions with all group leaders, we felt that we would rather have certainty and settle the matter than risk mounting legal costs.”

Of the council’s additional costs, £9 million has gone on interest payments, £9.8 million has been spent on legal fees, and a further £7 million has been spent on issues including fixing alleged busway track defects.

The council had hoped to win these back from BAM Nuttall in the event of a trial.

Cllr Kilian Bourke, who represents Romsey, said it was a bitter pill for taxpayers to swallow.

He said: “For all the Conservatives’ talk of the ‘robust contract’, the numbers clearly show this glorified bus service has cost local taxpayers over £30 million more than they said it would.

“That is a colossal hit for a local authority to take and creates a big extra financial burden on the county, at a time when it is already a challenge to protect frontline services.”

Because large additional sums which had already been paid to BAM Nuttall under the terms of the contract, the settlement will see the company make a payment of £33 million to the council. The firm declined to comment.

The council has already covered some of its overspend, but it has another £8 million to find - which will be paid over the next 25 years.